Risk AversionOctober 5, 2013
Risk aversion from buyers, sellers and lending institutions is a major obstacle facing today’s Realtor®. Many major financial institutions, having suffered losses or finding themselves under close scrutiny for questionable business practices, have put unrealistic risk aversion strategies into place, limiting the availability of credit. Short sale and appraisal problems cause the expectation of a continually declining market and economic malaise. Though addressing valid concerns, this type of excessive caution is harmful to the real estate market, keeping it weak by disqualifying solid candidates for loans from purchasing homes that they can afford.
This, in turn, undermines the ability of the market to re-build its strength by causing buyers to expect or demand unrealistic discounts on home prices. For the same reason, sellers place unrealistically high prices on their homes, leading to standoffs at the closing table and unsold properties. Today’s savvy Realtor® will guide their clients through the precarious world of the modern market, seeking solutions through compromise, realistic expectations from all parties involved in the transaction, and determining the most advantageous risk-to-payoff ratio available for both the buyer and the seller.